Chapter: Engineering Economics and Financial Accounting : Financial Accounting (Elementary Treatment)

Financial Statement Analysis

'Tearing apart' the financial statements and looking at the relationships - Who analyzes financial statements? 1. Internal users (i.e., management) 2. External users (emphasis of chapter)

FINANCIAL STATEMENT ANALYSIS

MEANING

'Tearing apart' the financial statements and looking at the relationships

Who analyzes financial statements?

Internal users (i.e., management)

External users (emphasis of chapter)

METHODS OF FINANCIAL STATEMENTS ANALYSIS

Horizontal Analysis

Vertical Analysis

Common-Size Statements

Trend Percentages

Ratio Analysis

HORIZONTAL ANALYSIS(COMPARATIVE STATEMENTS)

Using comparative financial statements to calculate dollar or percentage changes in a

financial

Statement item from one period to the next.

CLOVER CORPORATION

Compa ra tive Ba la nce She e ts

De ce mbe r 31, 1999 a nd 1998

CLOVER CORPORATION

Comparative Balance Sheets

December 31, 1999 and 1998

VERTICAL ANALYSIS (COMMON SIZE STATEMENTS)

For a single financial statement, each item

is expressed as a percentage of a significant total,

e.g., all income statement items are expressed as a percentage of sale

ER CORPORATION

Comparative Income Statement s

For the Years Ended December 31, 1999 and 1998

Increase (Decrease)

Study Material, Lecturing Notes, Assignment, Reference, Wiki description explanation, brief detail

Engineering Economics and Financial Accounting : Financial Accounting (Elementary Treatment) : Financial Statement Analysis |